Hi Dan,

Here’s how CRA generally treats an inheritance that is invested in a non-registered account and then placed in a joint account with a spouse:

1. Attribution Rules and Inheritances

Attribution rules under the Income Tax Act s.74.1(1) apply when a taxpayer transfers or loans property to a spouse or related minor for less than fair market value. The income and capital gains from that property are then attributed back to the transferor.

However, an inheritance is not a transfer or loan by you — it is a distribution from a third party (the deceased’s estate). Since there is no “transfer or loan” made by you, attribution rules do not apply.

CRA Support:

• ITA s.74.1(1): Attribution applies where “an individual has transferred or loaned property, either directly or indirectly… to or for the benefit of the individual’s spouse or common-law partner.”
• CRA Folio S1-F5-C1: Attribution rules apply only “when a taxpayer has transferred or loaned property to another person in certain situations.”
• Interpretation Bulletin IT-511: Confirms attribution applies to property transferred or loaned by the taxpayer to a spouse.

Because an inheritance is not your transfer, there’s no attribution.

2. Joint Non-Registered Account

When inherited funds are deposited into a joint non-registered account with a spouse, CRA focuses on who contributed the funds:

• If you contributed 100% of the funds, you report 100% of the income (interest, dividends, capital gains) — even though the account is joint.
• If you want to report 50/50, you must make a documented gift of 50% of the funds to your spouse. Attribution still doesn’t apply here because the funds originated from an inheritance.

3. Marital Property vs. Tax Reporting

You are right that co-mingling inheritance funds in a joint account usually makes them marital property for family law purposes. But for CRA purposes, reporting is based on beneficial ownership, not simply whose name is on the account.

Summary:

• No attribution rules apply to inheritances.
• Report income based on who contributed the funds, unless you document a gift.
• CRA looks at beneficial ownership, not just account title.